Silk Road busted by Feds; Ross Ulbricht arrested: Bad news for Tor and Bitcoin?

Ross Ulbricht, aka Dread Pirate Roberts.

Ross William "DPR" Ulbricht

The FBI has arrested the alleged operator of The Silk Road. The "eBay for drugs" is now down, after enabling more than a billion dollars in transactions, raking in $80 million profit in revenue -- all in Bitcoins -- according to the indictment.

In IT Blogwatch, bloggers boggle, but worry for the future of Bitcoin.

Jaikumar Vijayan reports the news for this mighty organ:

The FBI arrested Ross Ulbricht, the owner and operator of "Silk Road," an underground website that allegedly...traffick[ed] in illegal drugs, malware tools, hacking services and other illicit items. ... Law enforcement also seized close to 26,000 Bitcoins.


Court documents...described Ulbricht, 29, as a 2006 graduate of the University of Texas [and] a graduate student at the University of Pennsylvania...before he dropped out. [He] conducted business using the moniker "Dread Pirate Roberts." ... In July, Silk Road had more than 950,000 registered customers. More than 1.2 million transactions...between Feb 2011 and July [with] revenue [of] around $1.2 billion, with Silk Road pocketing about $79 million...according to the indictment.


The site...was only available through the Tor hidden network. ... [This] will likely prompt more questions about Tor anonymity.  MORE

Brian Krebs has got it infamy: [You're fired -Ed.]

The Silk Road [was] a sprawling underground Web site that has earned infamy as the “eBay of drugs.” ... DPR will be charged with a range of criminal violations, including conspiracy to commit drug trafficking, and money laundering. ... As late as last month [it] was hosting nearly 13,000 sales listings for controlled substances, including marijuana, LSD, heroin, cocaine, methamphetamine and ecstasy.


[It] didn’t just sell drugs. ... The complaint identifies...banking Trojans, pirated content...hacked accounts at Netflix and Amazon...fake driver’s licenses, passports, Social Security cards, utility bills, credit card statements, car insurance records...such services as hijacking Twitter and Facebook accounts...the sale of anonymous bank accounts, counterfeit bills, firearms and ammunition, and even hitmen for hire.  MORE

And Ken White breaks the bad:

My task talk about how the federal criminal justice system works. ... The U.S. Attorney's Office for the Southern District of New York...filed a criminal complaint against...Ulbricht, charging him with federal crimes. ... Meanwhile, the U.S. Attorney's Office for the District of Maryland has obtained a grand jury indictment against him.


The New York and Maryland charges represent two different ways the feds can charge you with a crime. The feds can indict you...and ask the grand jury to approve the indictment. Or they can seek a criminal a United States Magistrate Judge [who] reads the affidavit, finds it adequate to show probable cause for the crimes charged. ... Often they do both.


The Maryland indictment claims that Ulbricht...arrange[d] a cocaine transaction between an undercover agent and a seller. The New York complaint says that undercover agents have made...purchases of illegal drugs through Silk Road. The Maryland indictment also asserts that Ulbricht paid an undercover agent to kill a former Silk Road employee.


If convicted Ulbricht will be sentenced by a federal judge [and] likely faces a ten-year mandatory minimum...and an actual sentence of as much as a few decades. ... However, the "he faces up to 300 years in jail" numbers you will be hearing are nonsense.  MORE

So Lion, a "constantly amused, techno-socialist" worries for the future of Bitcoin:

If the indictment is true, MOST of bitcoins usage EVER was on Silk Road. ... So, bitcoin WILL crash.  

Any future "Silk Roads" that pop up will likely have disinfo campaigns against them by federal agents. Nobody's going to be able to trust this particular method again.  MORE

Meanwhile, Aaron Levie references an unfortunate selfie:

The Silk Road founder is now regretting learning about online anonymity from Anthony Weiner.  MORE

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